Examples of grace period in a Sentence
The terms of the loan allow for a ten-day grace period.
First Known Use of grace period
Financial Definition of GRACE PERIOD
What It Is
A grace period is a period of time, usually about 10 days, during which a past due amount can be paid with little or no penalty.
How It Works
Let's assume your credit card payment is due on December 15. You forget to make the payment. On December 20, you remember. By then, though, it's too late. Your bill is past due.
However, if your account has a grace period, you can make the payment and the creditor might not assess a late fee or other penalty.
Why It Matters
Past-due bills often incur late fees, higher interest rates, penalties and other charges. Worst of all, the creditor might report the late payment to the credit reporting agencies, leaving a black mark on your credit rating (and even lowering your credit rating). In some cases, a bill get so past due (say, 90 or 180 days), that the creditor considers the account in default and may charge off the balance. A grace period gives customers a chance to catch up quickly before it's too late. After that point, the lender might assign or sell the account to a collection agency, which will try to collect the balance.
GRACE PERIOD Defined for English Language Learners
Definition of grace period for English Language Learners
: an amount of extra time that someone is given to pay a bill, finish a project, etc.
legal Definition of grace period
Learn More about grace period
Seen and Heard
What made you want to look up grace period? Please tell us where you read or heard it (including the quote, if possible).